The table gives some items of the budget of the central government.
| Item (central government, 2024-25, per cent of GDP) | Value |
|---|---|
| Revenue receipts | 9.2 |
| Revenue expenditure | 11.8 |
| of which: interest payments | 3.6 |
| Capital expenditure | 3.2 |
| Recovery of loans and other non-debt capital receipts | 0.2 |
Using the table, arrange the following in increasing order of size:
(A) Revenue deficit
(B) Fiscal deficit
(C) Primary deficit
(D) Interest payments
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → (C), (A), (D), (B)
Each deficit is worked out from the table (all figures in per cent of GDP).
(A) Revenue deficit = revenue expenditure − revenue receipts = 11.8 − 9.2 = 2.6
(B) Fiscal deficit = revenue expenditure + capital expenditure − revenue receipts − non-debt capital receipts = 11.8 + 3.2 − 9.2 − 0.2 = 5.6
(C) Primary deficit = fiscal deficit − interest payments = 5.6 − 3.6 = 2.0
(D) Interest payments = 3.6, read from the table.
The primary deficit is the smallest because interest is taken out. The fiscal deficit is the largest because it adds capital spending to the revenue gap.
NCERT (2026-27): “5.2.1 Measures of Government Deficit … Item 3 in Table 5.1 shows that revenue deficit in (2024–25) (P.A.) is 2.6 per cent of GDP. …” “… Non-debt creating capital receipts are those receipts which are not borrowings and, therefore, do not give rise to debt. Examples are recovery of loans and the proceeds from the sale of PSUs. From Table 5.1 we can see that non-debt creating capital receipts equals 9.4 per cent of GDP, obtained by subtracting, borrowing and other liabilities from total capital receipts [1+4(a)+4(b)]. The fiscal deficit, therefore turn out to be 5.6 per cent of GDP. The fiscal deficit will have to be financed through borrowing. Thus, it indicates the total borrowing requirements of the government from all sources. …” “… To obtain an estimate of borrowing on account of current expenditures exceeding revenues, we need to calculate what has been called the primary deficit. It is simply the fiscal deficit minus the interest payments” |